Whether you’ve just graduated or have finally gotten back on your feet after a tough job search, it’s a big step to leave the nest. When all is said and done, it will feel great not to have Mom and Dad as roommates anymore.
If you do still live at home, you’re not alone: More than a million college graduates from the class of 2008 have moved back home, and the number of 26-year-olds living with their parents has jumped nearly 46% since 2007. And it’s not just that slice of the age range. Since 2010, the number of people between 18 and 30 living at home has climbed almost 4%, and the number of intergenerational households is at a 50-year high.
If you number in that bunch, here are some steps to get you started to strike out on your own.
1. Know how much money you’re working with.
Before you can figure out a budget for your new, independent lifestyle, you need to know how much money you’ll have to use each month.
If you have a job lined up, congrats! Look at your most recent pay stub to figure out your take-home pay, which is the amount you bring home after taxes. If you haven’t yet received your first paycheck, make an estimate by figuring out your tax bracket or using a paycheck calculator. When in doubt, round down, so you’re not overestimating.
If you don’t have a job lined up yet (like if you’re trying out a new city to search for jobs), you can rejigger your budget and potentially move to a nicer place once you’ve found your dream gig. In the meantime, job searches take a while—around 7 months, on average, if you’re unemployed.
Instead of creating a budget based on how much you think or hope you’ll make, calculate based on now. If you’ve saved a cushion to give yourself a six-month runway, for example, then divide your savings by six so you know how much you have each month as your personal “allowance.” If you’re receiving financial help from your family, know how much you can reliably count on each month.
The last thing you want is to make a financial commitment like signing a lease … and only realize later that you bit off more than you can chew.
2. Figure out how much you can afford in rent.
Now that you’ve figured out how much income you have coming in (or how much personal “allowance” you can afford per month).
To figure out your maximum rent, we’ll work backwards from the 50/20/30 rule, which says you spend no more than 50% of your take-home pay (or, in this case, your monthly “allowance”) on essential expenses. Essential expenses include rent, groceries, utilities and transportation. After that, you should dedicate 20% of your take-home pay to your financial priorities like your savings, retirement contributions and debt payments. You can spend the remaining 30% on lifestyle expenses, which is fun stuff like dinners out, shopping or a gym membership.
Add up your estimated monthly costs for each of these:
Transportation: This includes your car payment and gas, or the monthly cost of public transportation. (If you need help with your estimations, try our gas cost calculator.)
Utilities: You might estimate based on prior living arrangements. If you don’t have any experience paying utilities, a good rule of thumb is to estimate $75-$200 a month for an entire apartment, according to My First Apartment. Once you find a place you like, you can ask the current tenants about their monthly costs.
Groceries: Your grocery costs will vary depending on your tastes and whether you like to cook, but the USDA says that a middle-of-the-road figure is $50 per week on groceries for a single person.
Now add up those expenses. Next, you’ll calculate 50% of your take-home pay or monthly allowance. Subtract your total expenses from that 50% number. The amount you have leftover is the maximum you can spend on rent.
3. Get to know different neighborhoods.
Moving to an unfamiliar neighborhood? Check out the area at several times of day, so you know you’ll feel comfortable walking in the mornings, after work and late at night. Feel free to spark a conversation with some locals or chat with shop owners to get a sense of whether this is an area you’d like to live.
If you don’t know which neighborhoods are the safest (or least safe), you can check out a crime map at spotcrime.com.
Besides just making sure you feel safe, you’ll want to ensure that you’ll enjoy living in this neighborhood, too. Are there cafes or places to go in the evening? How will the location affect your commute? Use Google Maps to estimate how long your commute would be if you lived here. And walking the streets on a Saturday night can tell you very quickly whether you’ll find the nightlife to your liking.
4. Find a roommate—or two!
One of the easiest ways to save money on rent is to split the bill. Reach out on social media to see if any acquaintances or friends-of-friends are currently looking for a place, or a roommate.
You can also use a site like Craigslist. Joining up with a preexisting group of roommates can help you cut your costs, since most apartments listed under roommate-shares are already furnished. Make sure you vet any strangers very carefully and feel absolutely comfortable with them before agreeing to live together. You might even ask for personal references if you have any doubts.
Discuss your living styles to see if you’d be a good fit. Talk out who will pay which expenses, and whether you’ll change the rent according to room size. Once you have ironed out any issues, consider writing up a semi-formal roommate agreement, so you know where each of you stands.
5. Know what it takes to get a lease.
Are you prepared to sign a lease? If you are moving to a new city without a job, you might not be prepared to sign a year-long commitment. Some landlords will run a credit check before taking you on, so if you’re unemployed or don’t have strong credit from the get-go, you might need a co-signer.
Additionally, in some cities, like New York, renters are the ones who pay a fee to the real estate broker, not the landlord. Find out how it works in your city, and ask early on how much the broker’s fee will be.
If you’re not ready to sign a full-on lease, subletting is one option, though sublets are often more expensive because they’re short-term.
6. Read your lease or sublease.
If you choose to sublet, get something in writing and review your sublease carefully. If you go for a regular lease, make sure that you and your roommates read it thoroughly. Be sure to ask the landlord or broker about any points that seem unclear.
Some important questions include:
- How long is the lease term?
- When is the rent due? Do you have a grace period of a few days, or will your landlord come knocking at 9 a.m. on the first of each month?
- Is there a penalty for not paying rent on time?
- Which, if any, utilities are included in the rent?
- Can you sublet the apartment if you go out of town?
- What’s the penalty if you want to break the lease early?
- How much money do you have to pay upfront?
- What are the rules for getting your security deposit back?
- Are pets allowed?
- Are small changes to the apartment (painting, hanging pictures) allowed?
7. Negotiate your rent.
The most important thing to do before you attempt to negotiate is research. Ask around to figure out what other people in your building, block and neighborhood are paying. Peruse Craigslist and other apartment listings for comparisons.
There’s no guarantee that trying to negotiate your rent with your landlord will yield a lower payment, particularly if you’re moving to an area where demand is high, but it’s worth a shot. A few factors can put the odds in your favor:
- The apartment was vacant for a few months before you found it
- It’s winter, when fewer people are moving and overall demand is lower
- You’re willing to throw down several months of rent (think six months) at once
- You’re open to signing a lease that is longer than the typical 12 months
- You can convince your landlords that you’re a reliable renter who’s likely to stay, saving them the trouble of finding someone new in a few months
8. Document the state of the apartment.
When you move in, snap photos of your apartment in its move-in state. Make note of loose floorboards, dents in the walls and other flaws. When you move out, you don’t want to get charged for damage you didn’t cause.
9. Get renter’s insurance.
Renter’s insurance can protect you against unforeseen disasters, like a fire, wind storm, electrical surge or certain kinds of water damage. While your landlord’s insurance will cover fixing your actual building, it won’t cover any items of yours that get ruined, or your living costs if you have to stay elsewhere during repairs.
Renter’s insurance will also cover you if you experience a break-in or vandalism. It even includes liability coverage in case someone gets hurt while in your home, or if you accidentally destroy someone else’s property, like if you smash a neighbor’s window while playing ball in the street with your nephew. You can often add renter’s insurance on top of your auto insurance policy, or buy it directly from a broker.